Correlation Between Walmart and International Tower

Can any of the company-specific risk be diversified away by investing in both Walmart and International Tower at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Walmart and International Tower into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Walmart Inc CDR and International Tower Hill, you can compare the effects of market volatilities on Walmart and International Tower and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Walmart with a short position of International Tower. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and International Tower.

Diversification Opportunities for Walmart and International Tower

-0.54

Correlation Coefficient

Walmart  International Tower

Excellent diversification

The 3 months correlation between Walmart and International is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Walmart Inc CDR and International Tower Hill in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Tower Hill and Walmart is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Walmart Inc CDR are associated (or correlated) with International Tower. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Tower Hill has no effect on the direction of Walmart i.e., Walmart and International Tower go up and down completely randomly.

Pair Corralation between Walmart and International Tower

Assuming the 90 days trading horizon Walmart is expected to generate 2.58 times less return on investment than International Tower. But when comparing it to its historical volatility, Walmart Inc CDR is 3.93 times less risky than International Tower. It trades about 0.18 of its potential returns per unit of risk. International Tower Hill is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  61.00  in International Tower Hill on September 22, 2024 and sell it today you would earn a total of  6.00  from holding International Tower Hill or generate 9.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Walmart Inc CDR  vs.  International Tower Hill

Walmart Inc CDR

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart Inc CDR are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Walmart displayed solid returns over the last few months and may actually be approaching a breakup point.

International Tower Hill

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days International Tower Hill has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical indicators, International Tower is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Walmart and International Tower

The main advantage of trading using opposite Walmart and International Tower positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, International Tower can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in International Tower will offset losses from the drop in International Tower's long position.

The idea behind Walmart Inc CDR and International Tower Hill pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.